High bond yields make the Dollar an attractive investment

Raphael W Bostic, FOMC member is due to speak tomorrow and his comments on the likelihood of further rates hikes for the US in 2018 have the potential to impact Dollar exchange rates. The table below shows the difference in USD you could have achieved when buying £200,000.00 during the high and low trading points on Tuesday. This market report discusses the upcoming factors for USD and how they can affect rates in the short term.

Currency Pair

% Change

Difference on £200,000

GBP

USD

0.8084%

$2180

Sterling suffers against USD

The Pound has suffered against the majority of major currencies, but particularly the Dollar. There has been as much as a ten cent fall on GBP/USD. The pound has had some horrific data releases of late, retail sales and GDP being the worst of the bunch. Retail sales being as much as 0.7% away from expectations.

This was also coupled with very positive news from the States. Ten year treasury bonds have now exceeded 3% for one of the first occasions in nearly four years. Investors have clearly been taking advantage of this situation and the Greenback has benefited significantly as a result.

I think short term we could see further movement in the dollar’s favour. I think this week’s Bank of England rate decision could hurt the Pound, not so much the decision itself, but the speeches following the decision could carry a negative tone which could hurt the Pound.

Despite Trump’s trade wars slightly holding back the Dollar I am still of the opinion there is more room for improvement considering the US economic situation and monetary policy outlook.

USD- Events of consequence

FOMC Raphael Bostic Speech

Federal Open Market Committee member Raphael W Bostic is the CEO of the Federal Reserve Bank of Atlanta and is due to speak today. His words do have the power to influence the markets. There is the anticipation for a further two rate hikes from the Federal Reserve this year, considering current data releases Bostic could be fairly optimistic these could occur, if this is the sentiment in his speech we could see the US Dollar make gains.

CPI Data could influence FED on monetary Policy

Consumer Price Index (CPI) data is a measure of inflation and inflation is one of the key factors taken into consideration when the Federal Reserve make a decision on interest rates. The latest CPI figures are due tomorrow and there is expected to be little change, but if data comes out away from expectations expect market volatility.

N. Haywood

Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.